{"id":19663,"date":"2018-11-27T16:52:17","date_gmt":"2018-11-27T13:52:17","guid":{"rendered":"https:\/\/www.commercialcafe.com\/blog\/?p=19663"},"modified":"2018-12-05T17:01:36","modified_gmt":"2018-12-05T14:01:36","slug":"yardi-future-coworking","status":"publish","type":"post","link":"https:\/\/www.commercialcafe.com\/blog\/yardi-future-coworking\/","title":{"rendered":"Yardi On The Future Of Coworking"},"content":{"rendered":"

\u201cThe evolution of the flexible office sector has shaken up the real estate industry and has arguably changed it for the better,\u201d according to <\/span>a recent discussion<\/span><\/a> on the future of coworking.<\/span><\/p>\n

The Yardi think tank brought together a panel of experts and tackled some interesting topics regarding the commercial real estate and flexible office industries. Here are the highlights.<\/span><\/p>\n

Flexible Working Is Difficult To Define<\/h4>\n

\u201cI\u2019ve got my own view on where we stand in the flexible office market and we didn\u2019t fit into any of the definitions,\u201d\u00a0 said Chris Pieroni, Operations Director at Workspace Group. <\/span><\/p>\n

The definition of flexible working is getting increasingly difficult to pin down as the industry expands. Workspaces now use words such as hybrid, coworking, flexible or service to describe their purpose. <\/span>Some experts<\/span><\/a> suggest we need to broaden the definition of coworking to match the diversification of the market.<\/span><\/p>\n

Joff Sharpe, Head of Operations at British Land, said the industry needs to talk about customer responsiveness instead of focusing on flexibility. \u201cSo, I think the language needs to change from lease lengths and all the conventional speak and all this codification of what\u2019s coworking, what\u2019s flexible. What it really comes down to is: is the industry becoming better aligned with the requirements of its customer?\u201d<\/span><\/p>\n

However, some operators use terms such as \u201ccoworking\u201d to increase their curb appeal, without truly embracing this concept. <\/span><\/p>\n

Tony Freeth, Director of Coworking, Yardi, said: \u201cIt\u2019s interesting how people use the word coworking because it\u2019s got marketing leverage.\u201d He pointed out that many offices rebrand as a coworking space to get \u201can instant kick in terms of market attractiveness\u2026[by] just adding a little bit of communal space.\u201d<\/span><\/p>\n

Community Is Confusing<\/h4>\n

The impact of community on attracting occupiers is difficult to quantify. Each of the participants had very different views on this topic. \u201cThat community thing is something that I don\u2019t think is really well understood in the real estate market,\u201d highlighted Pieroni.<\/span><\/p>\n

He also suggested a community platform can help customers grow their business and create an ecosystem. As a result, Sharpe warned that operators have to \u201cbe a little bit careful about generalizing\u201d if they serve multiple segments. <\/span><\/p>\n

Mary Finnigan, Head of Transactions, Real Estate at WeWork, disagreed with this point. She said: \u201cThey are limiting themselves by not talking to other companies that can help them innovate their business in ways they may not have thought of before.\u201d<\/span><\/p>\n

Corporate Coworking Is Driving Growth<\/h4>\n

\u201cThe numbers would suggest that the real growth area in the market is the 50-plus desks…That\u2019s where that kind of mid-size-scale demand is coming from and from big companies too,\u201d according to John Williams, Head of Marketing at Instant Group.<\/span><\/p>\n

Finnigan pointed out the growing importance of <\/span>WeWork<\/span><\/a>\u2019s enterprise membership scheme, which is available to companies with 1,000+ members. The scheme now represents 30% of its membership base.<\/span><\/p>\n

As the customer demographic shifts from individuals and SMEs to large organizations, operators need to take care when building their brand.<\/span><\/p>\n

Pieroni added: \u201cThe brand thing is slightly more sophisticated than people think. I think on the occupier side, I want our brand in your face if you\u2019re looking for space. If you\u2019re in our building, I want you to know you\u2019re in a Workspace building.\u201d<\/span><\/p>\n

Brands Build Value<\/h4>\n

Branding also plays an important part in an organization\u2019s valuation, according to the think tank. Freeth said: \u201cYou\u2019ve got to think about the investment side of it too because the brand creates an intellectual property asset; a non-tangible value.\u201d<\/span><\/p>\n

Sharpe pointed out the confusion in the marketplace with regards to valuations, referencing the recent WeWork and Softbank investment versus <\/span>Regus ending takeover talks<\/span><\/a> to reposition its business. <\/span><\/p>\n

\u201cThe brands are different and products are different. There is also tension between traditional valuation methodologies that are tied into lease lengths and well-covenanted companies, and yet you have the WeWork valuation, which is valued more on things that you\u2019d associate with other types of companies,\u201d according to Sharpe.<\/span><\/p>\n

Pieroni added: \u201cI think the valuers have got a real problem because they don\u2019t know how to value short-term income.<\/span><\/p>\n

Rents May Start To Reduce<\/h4>\n

When asked whether rents will have to come down at some point, John Williams, Head of Marketing at Instant Group, said: \u201cIn London, we have reached that point. London is at saturation point; New York is the same \u2013 the two oldest markets for this type of space. In other markets, I think it\u2019s all go.\u201d <\/span><\/p>\n

This is an interesting insight. If other markets follow the same pattern as New York<\/a> and London, which is so often the case in the coworking industry, rents could start to come down across the board. <\/span><\/p>\n

However, this may be a moot point as the notion of rent<\/a> is null and void in the coworking industry. Pieroni added: \u201cThe traditional way of looking at real estate is the rental agreement and I think people are not going to be doing that anymore. It\u2019s a desk rate, a membership fee, cost per month. None of us uses the word rent in our day-to-day activity.\u201d<\/span><\/p>\n

The Future of Coworking Is Safe<\/h4>\n

If this discussion is anything to go by, the future of coworking will be vibrant and diverse. Branding will play an increasingly important part. It will differentiate operators and their business valuations.<\/p>\n

The operators clearly have different interpretations of what defines the flexible working market and what the future of coworking will bring. But an overriding optimism for the future of coworking is evident from this think tank.<\/p>\n

You can read the full discussion here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

\u201cThe evolution of the flexible office sector has shaken up the real estate industry and has arguably changed it for the better,\u201d according to a recent discussion on the future of coworking. The Yardi think tank brought together a panel of experts and tackled some interesting topics regarding the commercial real estate and flexible office…<\/p>\n","protected":false},"author":202,"featured_media":19854,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false},"categories":[37,2256,4014,39,2547],"tags":[],"class_list":["post-19663","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial-real-estate-news","category-coworking","category-featured","category-office","category-resources","wpautop"],"acf":[],"yoast_head":"\nYardi On The Future Of Coworking - 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